European stocks rebound as investors eye ECB, Fed meetings

By Sudeshna Ghoshal

Oct 26 (Reuters) - European shares staged a recovery on Monday as retreating oil prices and upbeat corporate updates aided investor sentiment at the start of a week packed with central bank policy decisions.

The pan-European STOXX 600 index .STOXX rose 0.4% to 638.45 points by 1050 GMT, after logging its steepest weekly loss since early September on Friday.

Genmab GMAB.CO jumped 13.7% to the top of STOXX, after the Danish biotech firm reported encouraging follow-up data from a mid-stage trial of an experimental colorectal cancer treatment.

Meanwhile, a survey by the Ifo institute showed German business morale improved more than expected in October. Germany's benchmark index .DAX gained 0.9%.

European equities were battered last week as tensions in France and higher oil prices soured investor sentiment. The protests intensified pressure on the euro zone's second-largest economy, which is grappling with soft economic growth and ballooning government debt.

Helping sentiment on Monday, oil prices eased from near six-month highs as hopes grew for a de-escalation in tensions between the United States and Iran.O/R

The broader energy sector .SXEP was down 1.5%.

On the flip side, travel and leisure stocks .SXTP, whose airline constituents are particularly sensitive to fuel prices, rose 1.6%, benefiting from the pullback in oil.

Most major sectors on the STOXX traded higher.

Investor attention now turns to monetary policy decisions out of the European Central Bank and US Federal Reserve, due later this week.

The ECB is set to meet on Thursday, with a pause widely anticipated after the central bank raised rates in June and September to counter ​rising inflation, as the Iran war pushed up energy prices. Economists polled by Reuters expect a quarter-point rate hike in December.

"This is a week to not pile into the market. Investors are going to see this as a week to reassess expectations, the direction of the market in many areas, whether that's bank policy, geopolitics — there's many things in play," said Daniela Hathorn, senior market analyst at Capital.com.

On the earnings front, shares Computacenter CCC.L gained 9.5% after the British technology services provider raised its annual profit guidance.

Portugal's Galp Energia GALP.LS, meanwhile, fell 9.7% after the company said talks with Spain's Moeve to combine their refining, chemicals and fuel retail businesses had collapsed. The stock was among the worst performers on the STOXX 600 and was on track for its biggest one-day decline in 11 months.